Korea's Daewoo to Lay Off More Staff

Published 8:00 pm, Monday, January 7, 2002

Financially troubled Daewoo Motor Co. said Tuesday it will lay off 12.3 percent of its sales staff to facilitate takeover negotiations with American auto giant General Motors Corp.

The layoff of 393 sales people followed Daewoo's announcement in November that it would shed 520 sales staff through early retirement packages. The combined job cuts would reduce by 26.3 percent the total work force of Daewoo Sales Corp., a marketing arm of Daewoo Motor.

"Our decision to shed more workers to cut cost and increase efficiency will have a big positive impact in negotiations with GM," said Kim Ki-ho, a spokesman of Daewoo Motor Sales.

The company said those to be laid off had refused to accept a new merit-based wage system adopted after Daewoo Motor Sales reported an operating loss of $34.6 million last year.

Daewoo Motor was declared bankrupt in late 2000 after years of reckless expansion on borrowed money. The company's sales shrank 40.7 percent last year to 448,613 vehicles.

GM signed a tentative deal in September to acquire Daewoo Motor and its sales subsidiary.

The world's largest automaker had said it planned to sign a binding agreement by the end of last year, but talks foundered when Daewoo refused to nullify a labor agreement that guarantees the jobs of all 10,000 assembly line workers even after the company is sold.

While Daewoo could help GM break into South Korea's closed market and bolster attempts to advance into China _ a key market for future growth of America's auto giants _ the company's huge debts have made GM cautious.